Wednesday, February 18, 2015

Health Affairs Blog
February 17, 2015
In The Debate About Cost And Efficacy, PCSK9 Inhibitors May Be The
Biggest Challenge Yet
By William Shrank, Alan Lotvin, Surya Singh, and Troyen Brennan

Health care reform is intended to lower costs, but they are still
rising, albeit less steeply than in the past. Moderation is not however
the case in the area of specialty pharmacy. The medications to treat
Hepatitis C are the most cited examples of a general inflationary trend,
but the pipeline of expensive medications is extensive.

We believe that resiliency is about to be challenged in a manner unlike
we have seen in the past, at least in the area of pharmaceuticals. A
number of pharmaceutical manufacturers are developing a new class of
medication to manage high cholesterol — the PCSK9 (proprotein convertase
subtilisin/kexin 9) enzyme inhibitors.

The PCSK9 inhibitors will be specialty medications and likely priced as
such. While we will not know exact pricing until the first generation of
these medications is approved for use by the Food and Drug
Administration sometime in mid-2015, estimates of annual pricing for
these injectable drugs are in the range of $7,000 – $12,000. Given the
number of people potentially eligible for treatment with the PCSK9
inhibitors will number in the millions, the potential overall
expenditures by payers are huge.

As this is chronic therapy, PCSK9 sales could be expected to persist and
grow over time, and will likely be the highest selling class of
medications in history. Plus, as a biologic agent, there will not be a
simple pathway to cheaper generics in a 10-15 year timeframe. Even in a
system that costs $4 trillion per year, a single therapy adding $100-200
billion in costs annually is extraordinary.

Managed pharmacy care, indeed the health care system, has never seen a
challenge like this to our resilience in absorbing costs. Payors, the
employers, and health insurers, will first be shocked, then expect
action. Action will take the form of compliance with clinical
guidelines, and careful managed care oversight.

But in addition, perhaps the costs of PCSK9 inhibitors will push us to
develop some consensus about the pricing of new specialty medications,
as part of a more thoughtful discussion about the use of scarce
resources on behalf of patients.

The White House
January 30, 2015
President Obama's Precision Medicine Initiative

Building on President Obama's announcement in his State of the Union
Address, today the Administration is unveiling details about the
Precision Medicine Initiative, a bold new research effort to
revolutionize how we improve health and treat disease. Launched with a
$215 million investment in the President's 2016 Budget, the Precision
Medicine Initiative will pioneer a new model of patient-powered research
that promises to accelerate biomedical discoveries and provide
clinicians with new tools, knowledge, and therapies to select which
treatments will work best for which patients.

Public-private partnerships:

The Obama Administration will forge strong partnerships with existing
research cohorts, patient groups, and the private sector to develop the
infrastructure that will be needed to expand cancer genomics, and to
launch a voluntary million-person cohort. The Administration will call
on academic medical centers, researchers, foundations, privacy experts,
medical ethicists, and medical product innovators to lay the foundation
for this effort, including developing new approaches to patient
participation and empowerment.

In the United States, innovation and research in health care have been
well rewarded… too well rewarded. The hepatitis C drugs, and now the
PCSK9 inhibitors for high cholesterol are cases in point.

Our obsession with letting the market perform its miracles has led to a
culture in which we accept and even expect the medical entrepreneurs to
be rewarded with the maximum prices that the market will bear. In fact,
prices have been pushed up well beyond what any normal functioning
market would bear simply because the new products are able to bury their
prices in the risk pools established by the private insurers and the
pharmacy benefit managers.

Prices are so outrageous that now even the pharmacy benefit managers are
complaining, as in the article by Shrank, et al. It is interesting that
they suggest, as a solution, "careful managed care oversight." Yet it is
the intermediary "care managers" that have permitted this outrage.
Besides, the private insurers are using these high prices to their
advantage by placing these drugs in tiers that shift much of the costs
to patients, thereby chasing away patients that would have higher health
care costs.

President Obama's Precision Medicine Initiative, as proposed, should
have us all concerned. He calls for public-private partnerships that
include medical product innovators. You can be assured that these
biomedical innovators have already plotted to share in this lucrative
market, knowing that their products will be introduced with prices in
the stratosphere after they complete the nuisance stage of developing
the products for the market.

The government already plays a role in taxpayer financed research. The
public has a vested interest in these products and the government should
be protecting our interest. When markets go awry it is the government
that has the responsibility to step in and right the wrongs. Since the
private insurers and pharmacy benefit managers have served us so poorly,
we should replace them with our own public program - a single payer
national health program. That would end our culture of developing new
products that have outrageously high prices built in as an essential
component.